7. SOBECHI SAVICTOR EVANSIBE

- Making a case for the Privatization of the Process Model

Sobechi Savictor Evansibe

1.0. INTRODUCTION

The extractive industries which include mining and oil and gas production have been the mainstay of the African economy. More than 57% of Africa’s export earnings come from the extractive industries as the continent boasts of about 30% of global proven mineral resource reserves (AFDB, 2008). Sadly, these mineral resources have not been substantially beneficial to African people due to over-dependence on revenue from the Extractive Industries which has continued to limit space for economic diversification (Golubski and Gandhi, 2019), corruption and limited accountability, conflicts, looting and mineral smuggling, and importantly, the gap between mining and manufacturing (Turok, 2013). However, “for Africa’s mineral resources to be beneficial and valuable for all people, policy makers need to address not only the governance and sustainability of the extractives sector, but also to stimulate value addition and promote linkages with other sectors in the economy (MADI, 2021). It is against this background that this essay aims to suggest innovative measures through which this goal can be achieved. The essay recommends “the privatization of the process model” to effectively manage the extractive industries for sustainable development.

2.0. THE PRIVATIZATION OF THE PROCESS MODEL

It is a disheartening fact that government corporations operating within the extractive industries and most other government-run enterprises in Africa have become ‘revenue-consuming’ entities instead of ‘revenue generating’ entities due to reckless utilization of resources, management of business entities by politicians who have limited business experience, ineffective management, corruption, as well as lack of accountability and transparency. At best, most of these government-businesses are kept on life support through bail-out funds; and at worst, most of them are liquidated. On the other hand, private corporations, knowing that access to bail-out funds is limited, employ best practices across the three core business processes namely; the People, strategy, and operating Processes to ensure continued corporate existence and growth. 

In terms of the people process, private businesses hire the best and most qualified minds in the labour market, provide conducive working conditions and adequate compensation and performance reward systems to ensure talent retention, develop efficient succession pipeline to ensure seamless replacement, while still outsourcing experienced workforce when necessary. For the strategy process, private corporations determine the marketability of their products, and the right time to fund-raise, pivot or diversify. They know when to add further services, when and how to enter into strategic partnerships, the right people to draft the strategies, and how to execute the strategic plan to ensure direction, sustainable competitive advantage, and profitability. Lastly, private enterprises optimize their operation process based on a robust plan that links the people and strategy to organizational goals. It is against this background that this essay suggests that our extractive industries could be better managed by adapting the processes of private corporations. Privatization of the process model should not be mistaken for privatization of government entities as the model only recommends the modeling of business in the extractive industries along the processes of private players in the economy while the governments retain control of the industries.

2.1. APPLICATION OF THE MODEL 

The people process is the most important of all the core processes because humans build the strategic plan and also execute the operating plans of a business. Hence, we start the application of this model by employing the best brains in the industry. We must develop an effective succession plan by offering opportunities for education of prospects, establishing a leadership development pipeline at all levels of business, rewarding high performers while handling poor performance adequately. Furthermore, the application of this model should ensure that our extractive industries are not left in the hands of politicians neither would they be used to compensate political allies. The privatization of the process model also ensures that realistic strategic plans are built by the right people and ensures the addition of necessary services to the business line in order to boost productivity and enhance profitability. Also, the application of this model should ensure effective management of operations in the extractive industries and getting things done efficiently and timely. 

This model should be adopted by the board of directors of the government-owned commercial entities in the extractive sector; while its implementation should be facilitated by a committee (of preferably, retired business executives and consultants) which should be supervised by the ministries of petroleum, mines, and steel, or their equivalents across Africa through follow-ups and inspections. 

3.0. HOW WOULD THIS MODEL STIMULATE VALUE ADDITION IN THE EXTRACTIVE INDUSTRIES AND PROMOTE LINKAGES WITH OTHER SECTORS IN THE AFRICAN ECONOMY?

The centre-piece of the implementation of this model would be to enhance productivity and profitability through increased processing of products from the extractive sector thereby promoting manufacturing while still adding value to the extractives industry and the economy at large. Further, the model supports expansion through partnerships, mergers and acquisition to facilitate the inter-connection of the various sectors in the African economy as these partnerships would cut across different levels along the value chain of the extractives sector. Importantly, the anticipated shift from export of extractive products without beneficiation to increased processing and manufacturing would also promote linkage to other sectors of the economy. Hence, the extractive industries would feed the processing and manufacturing plants with raw materials while the refined products will be marketed and consumed locally without limiting channels for export of both raw and processed products. Notably, increased processing would also stimulate linkage with the services sector; promote industrialization of Africa, support explosive job creation, while still diversifying the revenue base of African countries with its resultant positive impact on economic growth. 

4.0. CONCLUSION

This essay has suggested the adoption of a thoughtful home-bred strategy. The essay argues that, if the privatization of the process model is adopted, our extractive industries would benefit immensely from the processes which have led to growth and profitability of private corporations including those operating within the extractive industries in Africa.

REFERENCES

African Development Bank Group (2008). Governance of the Extractive Industries in Africa: Survey of donor-funded assistance. Retrieved on 19/12/2021 from https://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/Strauss%20brochure.pdf

Golubski, C. & Gandhi, D., (2019, November 19). Using extractive industry data to fight inequality & strengthen accountability: Victories, lessons, future directions for Africa. Retrieved on 19/12/2021 from https://www.brookings.edu/blog/africa-in-focus/2019/11/19/using-extractive-industry-data-to-fight-inequality-strengthen-accountability-victories-lessons-future-directions-for-africa/

Minerals Africa Development Institution (MADI)  in Conjunction with the Calestous Juma Legacy Foundation (CJLF) (2021). Essay Concept note

Turok, B. (2013). Problems in the mining industry in South Africa. GREAT Insights, Volume 2, Issue 2. February-March 2013. Maastricht: ECDPM. Retrieved on 19/12/2021 from https://ecdpm.org/great-insights/growth-to-transformation-role-extractive-sector/problems-mining-industry-south-africa/

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